ITA No. 497 of 2018 [1] IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 497 of 2018 Date of decision: 29.1.2020 Navneet Jhamb Appellant v. Assistant Commissioner of Income Tax, Central Circle, Faridabad Respondent CORAM: HON'BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Ms. Radhika Suri, Senior Advocate with Mr.Manpreet Singh Kanda, Advocate for appellant. Mr. Tajender K. Joshi, Senior Standing Counsel for revenue. AVNEESH JHINGAN, J. 1. By this common order, three appeals bearing ITA Nos. 496, 497 and 3508 of 2018 are being disposed of as similar issue is involved. assessment years involved are 2001-02 to 2003-04. For sake of convenience, facts from ITA No. 497 of 2018 are taken. Following substantial questions of law have been claimed: (i) Whether in facts and circumstances of case, ITAT has erred in law on facts in upholding orders passed by Lower Authority and in confirming action of Ld. A.O. in making addition of Rs. 78,88,222/- as undisclosed income allegedly being MANOJ KUMAR 2020.02.04 10:35 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 497 of 2018 [2] profit on sale of plot merely on basis of conjecture and surmises and without of any basis? (ii) Whether in facts and circumstances of case, ITAT has fallen in error in sustaining additions made by A.O. and CIT (A) on basis of loose papers which were even not being documents within meaning of Section 32 of Indian Evidence Act, 1972? (iii) Whether in facts and circumstances of case, ITAT has failed to consider fact that Ld. A. O. had made additions on basis of calculations taken from loose documents found during search in which Appellant was even not mentioned as buyer or seller, which is totally perverse as and when seller was M/s Indo American Electricals Ltd., and purchaser was Shri G. L. Verma, then where is occasion for assessee/appellant to show any profit or loss arising from these transactions in his return of income. (iv) Whether in facts and circumstances of case, ITAT has erred in law and on facts in confirming action of Lower Authorities in framing assessment U/s 153A in violation of principles of natural justice and passing impugned order by recording incorrect facts and findings and without confronting entire adverse material used against assessee? 2. Though number of substantial questions have been claimed, yet pin-pointed controversy is: MANOJ KUMAR 2020.02.04 10:35 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 497 of 2018 [3] Whether addition made on account of undisclosed earned profit on sale and purchase of property owned and sold by others could be sustained, especially when addition in hands of purchaser on basis of seized document has been set aside . 3. facts of case are that on 4.8.2005, search and seizure was conducted at premises of appellant, he is partner of real estate broker concern, namely, Reliance Estate Agency. Certain documents and loose papers were seized from his residential premises. Notice under Section 153A of Income Tax Act, 1961 (for short, 'the Act') was issued, return was filed declaring income of `4,13,720/-. Apart from other additions, Assessing Officer made addition on account of undisclosed earned profit on sale of industrial plots at village Jharsentli, Tehsil Ballabgarh, District Faridabad. land was owned by M/s Indo American Electricals Limited (hereinafter described as 'the seller'). Manmohan Singh was Managing Director of company. It was noted that M/s Reliance Estate Agency was appointed by seller to advertise and procure bids for sale of land. M/s TML Investments (P) Ltd. showed interest but deal did not mature, thereafter plots were subsequently sold. Assessing Officer came to conclusion that actual sale consideration of 16 plots tabulated in assessment order was much more than figures shown in registered sale-deeds. Assessing Officer relying upon loose sheet seized, mentioning amount received in cash and cheques calculated profit and divided same in half vis-a-vis assessee and Manmohan Singh, Managing Director of seller-company. assessment was finalised on 24.12.2007. Appellate Authority vide MANOJ KUMAR 2020.02.04 10:35 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 497 of 2018 [4] order dated 28.1.2011 partly allowed appeal, however, sustained additions of profit. Further appeal was filed before Tribunal which was dismissed on 25.6.2018, hence present appeal. 4. Learned counsel for appellant argued that Tribunal erred in sustaining addition inspite of fact that additions made on same basis, in hands of purchaser was deleted by Tribunal and in case of ITA No. 1985 of 2010 --Prem Parkash Nagpal v. Assistant Commissioner of Income-tax, and appeal filed by revenue was dismissed by Delhi High Court. It is submitted that no addition was made in hands of owner of property, i.e. either seller-company or Managing Director. 5. Learned counsel for revenue defended order and argued that addition made in case of buyer was deleted on technical ground, moreover documents were seized from premises of appellant and said deletion is of no help to appellant. 6. There is no dispute that on basis of loose sheet seized during search, addition was made on buyer and same has been deleted. Learned counsel for revenue is not in position to dispute averment that no addition was made in hands of seller. 7. Tribunal while dealing with averment that there is deletion of addition made on buyer stated that same is of no consequence, as it was deleted only on technical ground. reason recorded is against record and not plausible. relevant portion of order of Tribunal in case of ITA No. 4802/Del/2009-- ITO v. M/s Dua Auto Components P. Ltd., which was followed in cases of other MANOJ KUMAR buyers, like ITA No. 3532/Del/2008 M/s Flowmore Anti Counterfeit 2020.02.04 10:35 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 497 of 2018 [5] Security System P. Ltd. v. Income Tax Officer, ITA No. 3514/Del/2010 DCIT, Circle 11(1) v. M/s Indication Instruments Ltd. etc. is reproduced below: 6.1 We find that Assessing Officer has not brought even single word regarding nature of document and how he has concluded that they belong to assessee's and on money transaction has been taken place. He has simply relied upon reasons recorded without showing any application of mind on his part. 6.2 In this regard we note that it is also not case that seller has made any statement or had accepted receipt of on money i.e. consideration over and above that disclosed. It is also not case that seized documents were in handwriting of assessee or seller or were seized from premises of seller and purchaser. Ld. Commissioner of Income Tax (Appeals) has brought out various discrepancies in seized documents relied upon by revenue and striking feature of these anomalies is that in seized documents, it has been mentioned that impugned plot was not sold. Thus, working and figures mentioned therein can at best be said to be tentative or expected amount. This by no stretch of imagination can be treated as conclusive proofs of on money transactions. Moreover, it is admitted fact that documents being relied upon showed account as on 31.10.2001, while as per registered sale deed plot was sold on 23.5.2002. Under circumstances, these additions MANOJ KUMAR 2020.02.04 10:35 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 497 of 2018 [6] have been made on basis of documents found during search at place of third party which at best only showed tentative/ projected purchase consideration. It is not case that Circle Rate or value as per stamp registration authorities of impugned property is more than what has been disclosed. It is also not case that unaccounted cash has been found to be paid by assessee or received by seller. There is also no statement of seller on record that he has obtained on money. Under circumstances, additions made in this regard is not sustainable. 6.3 In this regard, we place reliance upon Hon'ble Apex Court in case of K. P. Varghese Vs. Income Tax Officer, Ernakulam and Another 131 ITR 597 (SC), wherein it has been held that burden of proving is that of Revenue when there is allegation of understatement on concealment in consideration shown. 6.4 We also place reliance upon judgement of Hon'ble Apex Court in case of C.I.T. vs. P. V. Kalyanasundaram in (2007) 294 ITR 49 (SC) in which allegations of on money transaction on basis of non-convincing loose sheets found during course of search and conflicting statement of seller, was deleted by Tribunal (to which, one of us Accountant Member was party) and same was affirmed by Hon'ble High Court and Hon'ble Apex Court. 8. While deleting additions, Tribunal recorded that figures mentioned in document at best be said to be tentative or MANOJ KUMAR 2020.02.04 10:35 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 497 of 2018 [7] expected amount. document seized showed account as on 31.10.2001 while registered sale deed of plot was dated 23.5.2002. It was not case of revenue that circle rate was more than what had been disclosed. No unaccounted cash was found to be paid by buyer to seller. There is no statement of seller regarding obtaining money and therefore addition was not sustained. 9. It may be noted at this stage that it is not case of department that property was owned by appellant or M/s Reliance Estate Agency. case set up was that apart from amount mentioned in registered sale deeds or payment received by cheques, there were certain cash transactions which were divided between assessee and Managing Director of seller-company. Without having any quarrel with issue that there may be possibility that assessee could apart from commission earn profit in sale-purchase transaction but basic issue would be that some cash amount would have been paid by purchaser. addition on said account made on buyer never withstood scrutiny in appeal. There is nothing on record to show that any addition was made in hand of seller or Managing Director of seller-company for alleged cash amount received. In this background, it would not be appropriate to hold that only intermediatory or broker can be saddled with additions. 9. contention of learned counsel for revenue that role of appellant was more than that of broker and he had earned profit also does not enhance case of revenue for reasons mentioned above. MANOJ KUMAR 2020.02.04 10:35 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 497 of 2018 [8] 10. appeals are allowed. question formulated in para 2 of judgment is answered in favour of assessee. (AVNEESH JHINGAN) (AJAY TEWARI) JUDGE JUDGE 29.1.2020 mk Whether speaking/reasoned: Yes/No Whether reportable: Yes/No MANOJ KUMAR 2020.02.04 10:35 I attest to accuracy and authenticity of this document High Court,Chandigarh Navneet Jhamb v. Assistant Commissioner of Income-tax, Central Circle, Faridabad